April 10 (Bloomberg) -- Sweden’s industrial orders grew for
the first time in more than a year in February as production
fell less than predicted, signaling the export-reliant economy
is recovering from weak foreign demand.

Annual industrial orders rose 2.1 percent after declining a
revised 5.7 percent the previous month, Stockholm-based
Statistics Sweden said today, the first increase since January
2012. Industrial output fell an annual 0.9 percent in February,
compared with a predicted decline of 1.9 percent, and a revised
8 percent the previous month.

“We expect industrial production to recover,” Torbjoern
Isaksson, an analyst at Nordea Bank AB in Stockholm, said in a
note today. “This is supported by the order intake that
improved somewhat in February. However, the production level is
still low and we expect the recovery to be slow.”

Sweden’s economy will grow by 1.6 percent this year and 2.6
percent in 2014, mainly because of increased domestic demand,
Swedbank AB forecast today, raising predictions it made in
January. This will prompt the central bank to elevate its main
lending rate to 1.75 percent next year from 1 percent,
Stockholm-based Swedbank said.

Sweden’s central bank has cut its main lending rate four
times since December 2011 as the country, which exports about
half of its output, has suffered from falling demand from Europe
where countries are cutting spending to reduce debt. The
Riksbank will announce its next rate decision on April 17.

Manufacturing confidence in Sweden’s $500 billion economy
improved to its highest level in seven months in March. That
followed better-than-forecast growth in the fourth quarter as
the economy expanded an annual 1.4 percent.

Swedish industrial orders rose a monthly 3.5 percent in
February compared with a forecast of 0.9 percent, Statistics
Sweden said today. Production rose a monthly 0.5 percent.